NFTs were supposed to be the next big thing in the digital art world, but they turned out to be a bubble that burst.
What are NFTs and how did they become popular?
NFTs, or non-fungible tokens, are unique digital assets that are verified and stored on a blockchain, the same technology that powers cryptocurrencies like Bitcoin and Ethereum. NFTs can represent anything from artworks, music, videos, games, memes, tweets, and even real-world objects. The idea is that by creating and owning an NFT, you have a proof of authenticity and ownership that cannot be duplicated or forged.
NFTs became popular in late 2020 and early 2021, when they started to attract the attention of celebrities, artists, collectors, investors, and media outlets. Some of the most notable examples of NFTs that sold for astronomical prices include:
- A digital collage by the artist Beeple, titled “Everydays: The First 5000 Days”, which sold for $69 million at Christie’s auction house.
- A video clip of NBA star LeBron James dunking, which sold for $208,000 on the platform NBA Top Shot.
- A tweet by Twitter founder Jack Dorsey, which sold for $2.9 million on the platform Valuables.
- A digital artwork by the musician Grimes, titled “Death of the Old”, which sold for $389,000 on the platform Nifty Gateway.
These examples and many others created a hype and a frenzy around NFTs, as more and more people wanted to get in on the action and make a profit from buying and selling them. NFTs were seen as a new and innovative way to create, distribute, and monetize digital content, as well as a way to support and empower artists and creators.
What went wrong with NFTs and why did they fail?
However, the popularity and the value of NFTs did not last long. By mid-2021, the NFT market started to collapse, as the demand and the interest for them plummeted. According to a report by Protos, the sales volume of NFTs dropped by 90% from its peak in May. Many NFTs that were bought for thousands or millions of dollars became worthless or…